Indian economy, which is still considered to be largely agrarian, heavily depends on monsoon because of rainfed crops grown in major parts of the country. A much awaited phenomenon, monsoon has a direct impact on the rural economy and on the agro-contribution as well. Also, it is substantial for the overall growth of the country?s GDP, which in turn increases rural spending leading to an overall economic growth.
No doubt, from the farmers to the government, everyone in the country always keeps a check on the performance of monsoon for the reason that it directly impacts the agricultural industry and shapes the economic growth as well. Better performance of monsoon means good harvest, better food production and high industrial output. Poor monsoon over the last two consecutive years has resulted in severe drought and drought-like situation in parts of Telangana, Andhra Pradesh, Karnataka as well as the Marathwada and Vidarbha regions in Maharashtra and has resulted in critical circumstances for the Indian agricultural sector. Last year the monsoon ended with a rain shortage of 14%, the worst since 2009, which led to drought and water-scarcity in 30% of the geographical area.
And thus the rain forcast by Indian Meteorological Department (IMD)for 2016 has brought smile on the face of every individual of the country. IMD has announced that monsoon rain is expected to be 106% of the long period average, covering almost entire country this year. The heavy monsoon rains so far have also helped the water level in the reservoirs to rise, which can offer more measure of water to the farmers for irrigation purposes. According to the Central Water Commission, as of July 21, the water available in 91 reservoirs was 54.419 billion cubic meters, which was higher than the 10 year average of 52.050 billion cubic meters (Source).
As a result of good monsoon, the overall planting stands 3.28% higher than 2015 at 692.98 lakh hectares. The plantation of kharif crop will be on 392.81 lakh hectare, the area under pulses acreage rose to 26.9%, planting of arhar has also increased more than 53% from the previous year (Source). The pulse-growing states are the obvious beneficiaries, helped by heavy monsoon rains in the season. The geographical area of coarse cereals which includes plantation of maize, bajra, ragi, and small millets witnessed an increase of 23.4% in the month of July and about to touch 130.80 lakh hectares. There is a jump in the oilseeds plantation as well and is going to cover 149.16 lakh hectares pretty soon. It is estimated that this year monsoon will boost the agricultural production and thus the rural demand and consumption, after the gap of two years. This is expected to bring lot of relief not only to farmers but also to common man, who have been feeling heat of increased inflation in past two year.
Good monsoon would directly mean an approximate 20% increase in farmer?s revenue in financial year 2016-2017 (Source), and contributing to the overall income of rural sector, all with a positive impact on the overall GDP. This will also trigger the demand for agro-related goods and services and therefore agro-based industries that sell or produce seeds, fertilizers, agro-chemicals, food processing, agro machinery & tools etc. will be the beneficiaries.
With a bumper monsoon, the Indian economy is likely to grow and we hope to look forward to a better FY 2016-2017.